Hidden Cost of Stress: How Financial Strain Affects The Workplace

April is Stress Awareness Month, which is a great opportunity for employers to recognize the many factors contributing to employee stress and implement solutions to help employees manage and reduce stress that may be affecting them at work. One of the biggest, yet most overlooked, stressors for employees is money. Financial stress doesn't stay at home -- it follows employees to work and shows up at the office in the form of distraction, disengagement, absenteeism, and turnover. For employers, the cost is real.

According to the 2024 Wellness Barometer Survey, employees lost an average of 7 hours per week due to financial stress, which in turn, cost businesses $183 billion annually. When financial strain becomes a daily mental burden, it's difficult for employees to bring their full focus, energy, and creativity to their roles.

How Financial Stress Shows Up At Work

Financial stress doesn't always show up in obvious ways, but over time, it can quietly wear down focus, energy, and morale across your team. Here are a few ways it often shows up at work:

• Decreased Productivity: Employees may spend work hours managing finances, dealing with unexpected bills, or simply feeling too overwhelmed to concentrate.
• Absenteeism and Decreased Engagement: Financially stressed employees are more likely to miss work or show up physically but are not mentally engaged.
• Lower Morale: Chronic stress often results in burnout, frustration, and diminished team collaboration.
• Higher Turnover Rates: Financial insecurity can drive employees to seek higher-paying jobs or lead to disengagement that ends in resigntation.

The Business Impacts of Financial Stress

When left unaddressed, financial stress can undermine your entire people strategy. It decreases employee engagement and retention, and can even inflate healthcare costs due to stress-related illnesses. This causes a direct hit to business performance and the bottom line in various ways including:

• Turnover Costs: When employees leave due to financial stress, it costs employers. Replacing an employee can cost employers 33% of that employee's annual salary, making retention critical.
• Lost Productivity: Financially stressed employees lose an estimated 7 hours per week dealing with money issues at work.
• Healthcare Expenses: Stress is linked to numerous physical and mental health issues, contributing to higher insurance claims and absenteeism.

What Employers Can Do To Help

The good news: employers are uniquely positioned to ease financial stress through proactive inclusive financial wellness strategies. Here's how:

Offer Financial Education

One of the most effective ways to reduce financial stress is to provide employees with ongoing financial education. This can include hosting workshops or webinars on practical topics like budgeting, debt management, saving, and retirement planning. Additionally, offering on-demand resources (such as e-learning courses or access to financial wellness platforms) ensures that employees can learn at their own pace and revisit topics when needed.

Provide Personalized Support

Every employee's financial situation is different, which is why personalized support is so valuable. Employers can offer one-on-one coaching with certified financial planners or advisors to help individuals set goals and navigate personal challenges. It's also important to tailor financial wellness offerings to meet employees where they are, whether they're paying off student loans, buying a home, or planning for retirement.

Encourage Savings and Stability

Helping employees establish financial security starts with encouraging healthy saving habits. Employers can support this by offering payroll-deduction emergency savings programs or contributing to employee savings through company match initiatives. Supporting retirement readiness is equally important -- employers should offer matching 401(k) contributions and provide clear, easy-to-understand information about plan options and benefits.

Integrate Financial Wellness Into Your Well-Being Strategy

Financial wellness shouldn't exist in a silo -- it should be an essential part of your broader well-being strategy. Recognize the connection between financial, mental, and physical health, and ensure your wellness programming reflects that. Most importantly, keep the conversation going year-round. Financial wellness should be a regular part of company culture, not just a one-off workshop or benefits meeting.

Conclusion

Financial stress doesn't stay at home when employees come to work. It walks in the door with them, affecting focus, engagement, and overall job performance. As we observe Stress Awareness Month, it's the perfect time for employers to reflect on the hidden cost of financial strain and the tangible value of addressing it.